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basics of banking

Basics of Banking

When we talk about “how to become your own banker” we are simply referring to adopting the mindset of a bank when considering your own personal finances, mostly notably your Infinite Banking policy. Why? Because banks have figured it out. They’ve figured out a way to utilize compound interest for their advantage, leveraging money with very little risk, to make more money and to grow their wealth.

[What is Infinite Banking? Check out this article to learn more.]

As Albert Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” And banks clearly understand it. But to fully understand why we need to mimic the banks, we first need to understand some key functions of the banking system that are important to our own personal banking system. 

Here are some basics of banking:


Banks thrive on your deposits. These deposits become the source for everything else they do. Without them, banks are dead in the water. So the more you put in, the better it is for them. 

Your banking system thrives on your premiums, which, in the case of infinite banking, act like deposits. And can you ever deposit too much money into your own banking system? No! The more you put in, the more you will benefit. Never stop paying your premiums. (And once you see the results of being your own banker, you’ll never want to stop paying your premiums.)


Conventional banks are in the business of lending and investing. They take about 90% of your deposited funds and lend them out, making somewhere between 400-1300% on your money. In other words, banks leverage your money to make more money for themselves, which means very little risk and very high reward.

Infinite Banking works best when your money keeps moving, just like conventional banking. Banks know if money is sitting around doing nothing, that’s a wasted opportunity. You must begin to think the same way. Move your money to make more money. And you can “move your money” by lending and investing in things you know, like, and understand.


Banks are well-known for the interest they charge on all their products. When a person borrows funds from a bank to finance their home, car, or a credit card, the bank charges a fee to the borrower to lend out that money. 

Your private bank should be no different. If you (or anyone) borrows money from your bank, interest should be charged. Even if you’re borrowing from your own bank, you should plan to not only pay yourself back, but pay yourself back with interest. This will help your bank to grow, allowing you to expand your banking system, and eliminating the need down the line for any outside sources of funding. 

Becoming your own banker all starts with one thing - changing your mindset to think like the banks. If you simply mimic the bascis of banking, and you learn how to leverage money the way they do, you’ll be able to maximize the growth and potential of your banking system, which results in a better future and a better legacy for you and your family. 

Want to dive deeper into this topic? Check out our podcast on IBC from Beginning to End: Apple / YouTube

When you’re ready to get started on creating your financial legacy or if you have more questions, most questions can be answered by watching this video. Start there and then schedule a consult with my team when you’re ready to begin.

Goals, Control, Working money, Getting started

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